| Depending on what type of tax problem you are facing, there may be more than one tax relief option available to you. You may be looking to file tax returns for one or more years and then be set up on an installment agreement. You may owe taxes for several years, do not have the means to pay the tax debt in full, and would like to propose a settlement or participate in a tax amnesty program. You may already be facing collection action due to unpaid taxes and must have a levy or garnishment stopped. Whether you fall under one of these categories or find yourself in an entirely different situation, a qualified tax professional can evaluate your case and determine the best possible course for resolving your tax problem.
Offer in Compromise (OIC).
The IRS may accept an abased on three grounds:
1. Doubt as to Collectibility - Doubt exists that the taxpayer could ever pay the full amount of tax liability owed within the remainder of the statutory period for collection.
2. Doubt as to Liability - A legitimate doubt exists that the assessed tax liability is correct. Possible reasons to submit a doubt as to liability offer include: (1) the examiner made a mistake interpreting the law, (2) the examiner failed to consider the taxpayer's evidence or (3) the taxpayer has new evidence.
3. Effective Tax Administration - There is no doubt that the tax is correct and there is potential to collect the full amount of the tax owed, but an exceptional circumstance exists that would allow the IRS to consider an OIC. To be eligible for compromise on this basis, a taxpayer must demonstrate that the collection of the tax would create an economic hardship or would be unfair and inequitable.
4. Identity Theft - The taxpayer was a victim of identity theft, did not earn the income that was reported to the IRS and should not be liable for the underlying tax debt.
IRS Audit.
The IRS can audit you for any year and determine that you owe additionally to what you had originally paid in. When you are audited for one year and inconsistencies are found, you typically will be audited for two more years.
Handling an IRS audit on your own can lead to mixed results and is an extremely difficult task. Tax attorney assigned to your case will go through all of your audit documentation, represent you before the IRS, and make sure you get the best result possible. When the audit is over, if it is determined that you have an additional tax due, your attorney will handle the rest of your case, reaching a tax resolution that you can afford.
Penalty Abatement.
Provided there was reasonable cause for the delay in payment, attorneys can get the IRS to remove the penalties and even some of the interest on those penalties. Penalties and interest are not taxes they are statutory additions that are negotiable by nature. Providing the taxpayer made an honest mistake, the IRS is often willing to grant penalty abatements in order to allow the taxpayer to pay back the penalty over time.
The last thing that you must keep in mind when applying for a Penalty Abatement is that after the case is submitted to the IRS, it will be reviewed by an IRS examiner. This person often has the ability to grant or deny your request completely at his or her own discretion, so it is of the utmost importance to be able to provide as much proof as possible for the reasons of falling behind.
You must also show the IRS a plan of how you are planning on paying your back tax debt.
Source http://www.taxadvisoramerica.com |
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